Apparently not all profit warnings come in threes. An initial 9 per cent jump in UK Mail's (UKM) shares that greeted the express mail service group's preliminary results tells you that the market was expecting a lot worse. In fact, a 3.6p cut in the final dividend and a 47 per cent contraction in full-year adjusted operating profit looks like good news compared with the business' apparent trajectory six months ago.
After lowering market expectations twice in the last year, the group actually squeaked ahead of consensus EPS forecasts. UK Mail chairman put the progress down to improvements at its automated sorting hub in Coventry, following the completion of investment in the facility. That was achieved after the receipt of the £10.3m final compensation payment from HS2 in November, which also boosted the balance sheet. The mail business, whose top line is shrinking relative to the size of the higher-margin parcels division, managed to grow volumes by 5 per cent in a declining market, although this weighed on margins.
Analysts at Investec anticipate pre-tax profit of £15m in the 2017 March year-end, leading to EPS of 21.8p, up from £10.7m and 15.4p in 2016.
UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 310p | MARKET VALUE: | £171m | |
| TOUCH: | 297-310p | 12-MONTH HIGH: | 543p | LOW: 245p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 122p | NET CASH: | £2.2m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 429 | 12.9 | 17.5 | 18.2 |
| 2013 | 475 | 17.8 | 24.7 | 18.8 |
| 2014 | 481 | 21.9 | 30.7 | 21.3 |
| 2015 | 485 | 20.1 | 29.0 | 21.8 |
| 2016 | 481 | 14.4 | 21.6 | 16.4 |
| % change | -1 | -28 | -26 | -25 |
Ex-div: 28 Jul Payment: 26 Aug | ||||
